March 28, 2024 - Australia lowered its projected metallurgical coal exports for 2023-24 (July-June) to 161 million mt, from 166 million mt estimated in December 2023, data released by the Department of Industry, Science and Resources showed March 28, as domestic production "only partially recovered."

The lower revision indicates that 2023-24 exports will increase by about 3.2% from 156 million mt exported over 2022-23.

"Australian metallurgical coal production and exports have been constrained in recent years by bad weather and logistical problems," the department said. "But demand factors also played a role, including relatively soft steel production among some regional importers, and sustained low exports to China even following the removal of trade restrictions."

Nevertheless, it maintained its export projection for 2024-25 at 174 million mt, unchanged from the December forecast, as new met coal mines in New South Wales and Queensland will "ramp up" production.

But the department cautioned that "another La Niña introduces volatility to the outlook" referring to a weather phenomenon describing a cooling of ocean temperatures, as opposed to El Nino.

Despite the optimistic projections for met coal exports, prices are expected to fall "as supply disruptions gradually diminish," the department said, forecasting an average price of $277/mt in 2024, down from $298/mt in 2023, and heading lower to $185/mt by 2029.

The lower spot prices for met coal "could potentially affect the outlook for new projects, though key prospects such as Olive Downs and Maxwell are expected to continue ramping up in the near-term," it said.

But China's met coal imports are expected to fall as its "steel output is projected to decline modestly" which will lead to seaborne imports falling to 47 million mt by 2029 from 64 million mt in 2023. The imports are estimated to fall from 2023's level to 59 million mt in 2024.

Nevertheless, the lower demand will be offset by consumption from India, which is expected to rise to 89 million mt in 2029 from 73 million mt 2023 and 77 million mt in 2024.

Iron Ore Exports to Rise Despite Lower Price Outlook

The outlook for Australian exports of iron ore was bullish with annual exports rising to 905 million mt in 2024 from 893 million mt 2023, and growing to 983 million mt in 2029.

The anticipated rise in exports will be due to additional greenfield supply coming online from established and emerging iron ore producers.

Nevertheless, iron ore spot prices were volatile amid a weaker property sector in China and Chinese government measures to support its economy.

"Despite recording flat steel production in 2023, China's iron ore imports grew by 6.6% to a record 1,180 million mt in 2023," the department said.

Nevertheless, as China is expected to "experience modest falls in steel output...to 2029" thus affecting overall global iron ore demand, and "putting downward pressure on iron ore prices," the department said.

The department projected average iron prices at $95/mt for 2024, down from $107/mt in 2023 and falling by a CAGR of minus 7.3% to about $68/mt in 2029.

Platts assessed the benchmark premium low-vol hard coking coal unchanged from the previous session at $245/mt FOB Australia March 27 while the 62% Fe Iron Ore Index was assessed at $101.30/dry mt CFR North China, down $2.9/dmt, data from S&P Global Commodity Insights showed.